Late with a payment? No wonder car won't start

A new device reminds drivers when a car payment is due. And if they don't pay up, they're not going anywhere.


St. Petersburg Times | July 23, 2005

ST. PETERSBURG - One of life's cruel quirks got Amber Jumbelick into trouble.

When the 23-year-old waitress had her first child, she began paying expenses by credit card. Then she lost her job and her ability to pay bills. Her credit tanked.

"I needed a car, but my credit was so bad nobody would give me a loan," Jumbelick said. "I'm a waitress and a single mom with a baby boy. I don't have extra money to put away."

Chuck Lutes hears that sort of story a lot.

Lutes, owner of Affordable Auto Sales on 66th Street N in St. Petersburg, thinks he has found a solution. It's a device he installs on every car he sells that alerts drivers when they have a payment due. Day by delinquent day, the alert gets increasingly insistent. On the fifth day, the car won't start.

Lutes says the device, called On Time/Payment Protection Systems, has dramatically increased customers' on-time payments. Jumbelick says the need to pay up and pay on time has improved her credit score after less than a year.

"With this system, I don't have to go out chasing my money," Lutes said. "And I want the money, not the car."

Lutes has been using On Time since October. According to his computer data files, only 65 percent of his customers were making payments on time before October. Now, about 95 percent of his accounts are current.

Mike Simon, president and chief executive officer of Payment Protection Systems in Temecula, Calif., said the idea for the On Time device came from a plea from a car dealer in 1996.

"We make microchips for auto-related things, like security, and one day a dealer said he wished we could make a chip that would make people pay on time," Simon said. "That sounded like a reasonable request. The technology was out there."

Three years later, On Time was born. Simon said 1,500 dealers across the country use the little devices, even some traditional new-car dealers. Both Simon and Lutes think Affordable Auto Sales is the only dealership using On Time in the Tampa Bay area.

The little black box with a four-button keypad is mounted under the dash and connected to the car's electrical harness. Once the dealer and the customer have agreed on a payment schedule - and Lutes insists on weekly payments - the schedule is loaded into a Windows-based computer program in the dealer's office.

As long as payments are made on time, the light on the module shows green. On the first day a payment is delinquent, the light blinks red for 24 hours. On day two it flashes in pulses of two. On day three, there are three pulses in quick succession. On day four it beeps all day long. On day five, the car stops working.

As soon as a payment is made, the customer is given a code to punch into the module that returns it to green until the next payment comes due. Once the car is paid for, the module is removed and used on another vehicle. They have seven-year life spans.

The device will not shut a car down while it's in operation. If the payment is five days late, it simply won't start again.

"It definitely works," Jumbelick said. "I got in the car (a 1993 Saturn) once, and the light was red, and I thought, "Uh-oh, I'd better go make a payment.' "

Lutes said he doesn't even run credit checks on customers any more. He checks with landlords and utility companies - a de-emphasis on credit that is spreading to even traditional car dealers, according to Simon.

"Bad things happen to good people," he said. "Dealers, traditional and otherwise, are beginning to ask where you live and how long you've lived there, do you have a job, and that's it. Traditional dealers are losing 33 percent of potential customers to credit issues when that level of loss probably isn't necessary."

Nationwide, Simon said, 24 percent of a typical used-car dealer's accounts are delinquent. For those using the On Time system, delinquencies fall to 5 percent. Repossessions drop from 27 percent to 5 percent, he said.

Lutes said his repo rate hasn't changed much, "but it's the on-time payment record that's more important to me."

There are other systems available that use global positioning systems to help find a car on which payments are delinquent, and On Time has a GPS option that Lutes didn't take.

"None of the other systems had the reminder component to help a customer avoid a late payment," he said. "I like the fact that this one helps create good payment habits."

Lutes laughed.

"I have a name for the system," he said. "I call it "My Co-Signer."'

Disturbing Truths